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-- Posted: May 19, 2000

Dorothy Rosen -- The Dollar Diva Ask the Dollar Diva

How do I create a credit card payment schedule?

Dear Dollar Diva,
I want to pay off a credit card debt making more than the minimum payment each month. Where can I find a calculator that will help me figure out a payment plan and also give me an amortization schedule that shows the interest and principal amounts of each of my monthly payments?

-- Constance

Bankrate.com has a number of calculators to help with personal finance issues, and the one the Dollar Diva thinks would work best for you is "The true cost of paying the minimum."

Here's what you'll need to know to use the calculator:

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  • What is the credit card balance?
  • What is the interest rate?
  • Your minimum payment is calculated at what percentage of your total balance?
  • The minimum payment
  • What fixed payment can you afford to make each month?

Select a payment schedule based on either the credit card company's minimum payment or the higher fixed payment you are committed to making each month.

The calculator will give you the number of months before you are rid of your debt and how much of your total payments will be interest. It produces a month-by-month amortization schedule.

Anyone who is currently making the minimum payments on a credit card should take advantage of this powerful tool. You may suspect that you're doing yourself a disservice, but the Diva expects you will experience an epiphany when you actually see the numbers with your own eyes.

Let's say someone has a credit card balance of $10,000, an annual interest rate of 18 percent and a minimum monthly payment of 2.5 percent of the balance. Suppose he stopped charging on the card and paid the ever-descending minimum? What if he kept paying the current monthly payment of $250, or even upped it to $350?

Monthly payment Number of years to pay off balance Amount of interest he would pay

(currently $250, decreasing a little each month)

31 years + 10 months


$ 250

5 years + 2 months

$ 5,386

$ 350

3 years + 2 months

$ 3,156

Some truths are self-evident: paying the minimum monthly payment is enormously profitable for the credit card company and damn expensive for the credit card holder. That's why the minimum payments are set at such low rates.

Once you grasp this truth and get mad as hell at the credit card companies for milking you dry, you're ready for the next step: working on getting those balances paid off as quickly as possible.

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